Welfare Reform (Part 2)

Heritage Explains

Welfare Reform (Part 2)

Where We Stand

This week, we break down the Biden administration’s plans to expand welfare. Jason Turner, executive director at Secretaries’ Innovation Group, joins us for the second part of our series on welfare 25 years after the 1996 bipartisan reform.

>>> Welfare Reform (Part 1): How We Got Here

Michelle Cordero: From The Heritage Foundation, I'm Michelle Cordero. And this is Heritage Explains. This week we dive into part two of our miniseries on welfare 25 years after reform. And well, there's no denying it, the welfare reform of 1996 was a massive success. Welfare caseloads, which hadn't dropped significantly for 50 years fell by 60%. The child poverty rate, which hadn't moved for 25 years suddenly dropped by a third.

Cordero: Overall, the poverty rate for single-parent families has dropped by two-thirds, and this success goes beyond work in poverty. Before reform, pregnancy and birth rates for unmarried teens quadrupled, but with welfare reform, this trend reversed. But in a tale as old as time, liberals want to turn back the clock and make welfare one-way handouts that promote social marginalization and impede upward mobility. The Biden administration has massively expanded welfare benefits under the guise of child-tax credits, if made permanent, it would be the second-largest increase in the welfare system.

Cordero: So why do liberals think this would be a good idea? Today, our guest, Jason Turner helps us understand the opposing viewpoint. He also walks us through what happens to an individual in a society when they stop working? Turner formerly served as New York City Mayor Rudy Giuliani's Commissioner of Human Resources Administration. And before New York, he led the State of Wisconsin to develop an epic fully work-based alternative to welfare. Our conversation, after this short break.

Cordero: So, Jason, we're now at 25 years since the United States reformed work and marriage requirements in our welfare system, has the United States seen improvements since that 1996 reform?

Jason Turner: Oh, yes. There were traumatic improvement in particular for the first five years, and then it flat-leveled out. But during the first five years, welfare dependency went from five million cases nationwide to two million cases, that was tremendous improvement. And it wasn't because people were just leaving welfare and going home and sitting on the couch, they were taking jobs by the thousands.

Cordero: Yes, are any idea as to why it's flattened out?

Turner: Yes, there is an idea as to why it's flattened out. First, there is the phenomenon of getting the most people off welfare and into work. And then initially, and then after a certain period of time, it never goes down to zero, but it flattens out because most of the people who can work are in the labor force, that's what happened in the first five years. And then since then it's been stable and has not come up again.

Cordero: Despite these successes, the Biden administration is seeking to expand welfare and undo this reform, and they're doing it under the guise of child-tax credits. Can you explain to me how these tax credits work?

Turner: Yes. These tax credits, it's a way of seducing the public by not using the word welfare, but welfare is exactly what it is. A tax credit is something you get when you have earned income and you get a deduction for certain expenses. But when you get money back from the IRS for income that you never earned, it's not a credit, it's not a deduction, it's welfare and that's what's happened, is they use that term to seduce the public, and I don't think it's honest. In any event, these credits are very extensive.

Turner: And if you take the amount of welfare that was previously available over the course of a year to an average family in United States that was accessing welfare, the total benefits from turn up welfare cash and food stamps together on average was about $11,500 per family before. Now, after this new money dump, the same family will be accessing $19,500, these calculations come from Doug Besharov of University of Maryland. So you can see what an extensive change it is. And with that much extra money, given the fact that earned minimum wage is only about $15,000 nationally. There's going to be more money for sitting at home than going to work, and this is going to have a tremendous detrimental effect to families everywhere.

Cordero: It makes me think of the current situation with the workforce and people not going back to work after COVID, would this hit at a time that would undermine any efforts to get people back to work?

Turner: You can see through the severe labor shortage after COVID that many people have gotten used to living at home, working from home or not working at all. And once you break the work habit, which we all have when we get out of school those of us in the middle-class, once you break that habit, it's very difficult to re-establish it. Because regular work if you can avoid it for certain population can't be restored that easily, and that's what we're seeing happen. And what we can expect with this $19,500 of free income without work will be a disaster. People leaving high school will opt either to stay at home and receive $20,000 a year or to go to work and work is, for all of us when we first get out of school, it's tedious. Most of it and it's hard. And so they won't establish those habits, and increasingly the young population will be exiting the labor force and not establishing their credentials.

Cordero: So on Heritage Explains, we'd like to flip the issue around some times and try and see things through the left's perspective. How is it that liberals think that this huge chunk of money for no work is going to help the poor?

Turner: For liberals, the single metric that they care about is income level. So if a family doesn't have enough income by their measurement, their standard default recommendation is to transfer or give free money to the family. They have the opinion that if you look around and you see that the middle class has a higher income than the dependent class, they say the answer is to just make the poor closer in income level to those people who go to work every day and their lives will somehow be transformed by that money coming into the household. Of course, it's nonsense, but it's never put that way by the academic.

Cordero: Can you describe for us some of the effects of long-term unemployment or what happens you aren't working?

Turner: So these are six characteristics of people that are subject to enforce the idleness, in other words, their lives are not dominated by an eight-hour workday. First, the individuals affected go into social isolation, they don't interact anymore with colleagues. And they also interact less with their neighbors, they actually withdraw from voluntary associations and other kinds of activities that used to occupy their time. The second thing that goes up is family stress because where you're not outside of the house work during the day when you're inside of the house all of the time, or most of the time your stress level goes up and family functioning goes down.

Turner: The next thing that happens is there's decline in physical health, in other words, people that go on disability on long-term unemployment they're the healthiest, right? When they go on the system and their physical health declines over time. The next thing that happens is mental health decline when you enforce the idleness, in addition to physical health, many different indicators for that. The next thing that happens is drug use goes up. And so forced idleness makes a whole day available a boring day and so this is often filled with drugs that become addictive. So there was absolutely no good thing that comes out of giving someone $20,000 of free income without having to work, it's the disaster.

Cordero: So interesting, I can't help, but kind of see the parallel between what a lot of people experienced during the lockdowns with COVID and forced idleness, from that perspective. You kind of know that it's absolutely true what you're saying, because we saw so much of that when people had to stop working?

Turner: Precisely. For most people, unless you're a renaissance man, for most people, the core of their day must revolve around getting out and contributing to others in the community and the society and the economy by putting in a workday. If you lose that core responsibility and activity the society declines.

Cordero: Reminds me of another episode that we did on Heritage Explains on the dignity of work.

Turner: Precisely. So the other thing the left wants to do is they want to separate dignity by its connection to work, and they want to substitute income level, which can be transferred income in terms of dignity. So if you have $20,000 of new money, are you going to be like a middle-class family? That's what the left belief.

Cordero: Right? So in conclusion, what are some of the ways that Congress can instead build-off of the 1996 reform and actually help families?

Turner: The thing we learned from the 1996 reform is first how really easy it is if the state is set up properly to do this to get people into employment? So at one time 20 or 30 years ago, we thought in order to get people who are unemployed and have never been employed into the labor force, we had to give them skills, which would give them a human capacity to make a contribution to an employer. And until we educated them with school and skills training, they wouldn't be able to enter the labor force. Once they had those skills, they could on their own voluntarily, get it done, that turned out to be not true and it was a study for a long time with many treatment and controls.

Turner: Instead, what we found was that if you require an individual to occupy his day either working or studying or in-training, one of those three, most people will choose to go right to work in a job that they qualify for, including an entry-level job and they'll make more money than they would if they were in-training. And then finally, they'll improve their life circumstances and their income over time by moving up the employment ladder.

Turner: So we have to go back to the next thing, benefit, [inaudible 00:14:03] of benefit to work obligation, which has been lost. And many states are retreating from it because they don't have to do it anymore as opposed as a requirement by the federal government. So that's a big issue that we need to address in Congress.

Cordero: Thank you so much for your expertise on this issue. And hopefully we can talk to you again on this same topic?

Turner: Thank you for having me, I hope to have that opportunity

Cordero: And that's it for this episode of Heritage Explains. If you liked this week's episode, do us a favor, leave us a five-star rating on Apple Podcasts or wherever you're listening, it really does help. conservative shows like us break through the liberal noise. Banks and Tim will up next week with a special guest for our last episode on welfare 25 years after reform.

Heritage Explains is brought to you by more than half a million members of The Heritage Foundation. It is produced by Michelle Cordero and Tim Doescher, with editing by John Popp.